Longer TRO on Meralco may alter inflation

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The extended temporary restraining order (TRO) on the Manila Electric Co’s (Meralco) power rate hike may have an impact on the inflation rate forecast of the Bangko Sentral ng Pilipinas (BSP) this year, a high-ranking BSP official said.

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According to BSP Deputy Governor Diwa Guinigundo, the 60-day extension of the TRO may be considered by the BSP in the downward adjustment of its inflation forecast this year.

On the account of the delay in the implementation of the power rate hike, the central bank has lowered its inflation forecast for 2014 to 4.3 percent from its previous forecast of 4.5 percent, still within the 3-percent to 5-percent target band of the BSP this year.

However, Guinigundo noted that the inflation forecast adjustment still depends on the future of the proposed electricity price hike of Meralco.

“It’s still depends on the amount [on a staggered basis]and the schedule [of the implementation upon the Supreme Court’s decision],” he said.

The Supreme Court first issued a 60-day TRO against Meralco on December 23, 2013, to stop the power utility distributor from charging its customers the P4.15 per kilowatt-hour increase.

The TRO was extended for another 60 days until April 22, as deliberations on the power rate hike is still pending before the High Tribunal.

However, the BSP earlier noted that pending petitions for adjustments in utility rates remain a risk to the inflation outlook of the Philippines.

“We also consider that [the TRO]can be a risk in the upside. We are open to the possibility that Supreme Court might lift the TRO, and in that case, it will have an effect in the forecast for 2014 and 2015,” Guinigundo said.

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